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Top Suburbs with the Most New Apartments In Last 5 Years

Some suburbs are better-equipped than others with new apartments to meet the potential trend to suburban living that has been caused due to the pandemic shift toward work-from-home solutions, according to a study from Rent Café.

If work-from-home is going to become the new normal, we might expect to see a “significant reversal of recent homebuilding patterns,” according to a housing study by Harvard University.

Regions that have grown significantly in population in recent years are seeing a boom in apartment development, and the southern states clearly dominate the map.

Suburban Texas is a great example, claiming more than a third of the national list.

Out of the top 20 suburbs with the most apartment developments delivered since 2016, eight are in the Lone Star state. Second is Colorado with three suburbs in the top for the highest number of newly-built apartments in the country. And Florida, Arizona, and Nevada suburbs are also among the national leaders, the Rent Café study says.

Some highlights:

  • Nationwide, there were more than 501,600 apartments delivered in the suburbs in the last five years.
  • Out of the top 20 suburbs with the most delivered, eight are in Texas, with the Dallas metro accounting for the majority of suburban deliveries here.
  • With more than 8,000 new units, Frisco, Texas is the suburb with the highest number of apartments built in the last five years. McKinney, Texas came in second with 4,800 new apartments, followed closely by Chandler, Ariz., and Spring Valley, Nev.
  • Looking at the 1,300 suburbs analyzed, new apartments account for a 30 percent average of the suburban rental stock. Garden apartments were the most popular type of development.

“To find the suburbs that offer the most options for renters, we analyzed Yardi Matrix data for large-scale apartment buildings of 50 units or more, in search of suburban areas that have developed the most,” the report says.

Top Suburbs with the Most Apartments built In Last 5 Years
Top Suburbs In Last 5 Years

“These locations are also great options for those considering a move to the suburbs because of their proximity to the core cities; 12 out of the 20 suburbs on our list are located no more than 20 miles away from an urban center.”

The No. 1 suburb for new apartments

The suburb with the highest number of apartments built in the last five years is Frisco, Texas.

  • With 8,044 apartments built and spread across 25 apartment buildings, this fast-growing city in the Dallas metro area has recently built a significant share of new rentals, most of which are in garden-style complexes. Frisco is located just 28 miles from Dallas. Details:
    • Apartments built in the last 5 years: 8,044
    • Number of buildings built: 25
    • Share of apartments built: 42 percent
    • Population: 200,513
    • Most common type of building: Garden
Frisco is the top suburbs with apartment development
Frisco, Texas complex Skyhouse Frisco Station.

Summary

With the suburbs now finding new appeal for renters, some are better-equipped than others to meet the potential change to suburban living.

RENTCafe.com is a nationwide apartment search website and a part of Yardi. Our original city-based research, insights, and in-depth analysis of the real estate market have been used in stories featured on major media publications across the U.S.

Renters Now a Majority in 23 Cities, Including Seattle

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Portland Rents Continue 9-Month Trend Of Declines

Portland rents have declined 0.9 percent over the past month, and have decreased sharply by 7.0 percent year-over-year, according to the latest report from Apartment List.

This is the ninth straight month the City of Portland has seen rent decreases. The last time any rents went up was back in March of 2020.

Median rents in Portland are $1,119 for a one-bedroom apartment and $1,305 for a two-bedroom.

“As we enter the New Year, our national rent index has begun to stabilize after a wild 2020. Rents are down 0.4% month-over-month nationally, a seasonal dip consistent with what we’ve seen in prior years,” said Igor Popov, Chief Economist, Apartment List.

“That said, there has been significant regional variation in the impact of the COVID-19 pandemic; while our national rent index is down by a fairly modest 1.5 percent year-over-year, many markets are experiencing greater volatility. The urban cores of San Francisco, Seattle, Boston, and New York City continue to see rent prices fall rapidly, while many smaller markets and suburbs are actually getting more expensive,” Popov said.

Cities in the metro showing year-over-year rent growth

While Portland is seeing continuing rent declines, cities in the rest of the metro are seeing the opposite trend.

Rents have risen in 7 of the largest 10 cities in the Portland metro for which Apartment List has data..

  • Looking throughout the metro, Lake Oswego is the most expensive of all Portland metro’s major cities, with a median two-bedroom rent of $1,839; of the 10 largest cities in Oregon metro that Apartment List has data for, Beaverton and Corvallis, where two-bedrooms go for $1,529 and $1,147, are the two other major cities in the metro besides Portland to see rents fall year-over-year (-0.8 percent and -0.7 percent).
  • Bend, Vancouver, and Salem have all experienced year-over-year growth above the state average (9.4 percent, 5.2 percent, and 4.8 percent, respectively).

Portland Rents Continue 9-Month Trend Of Declines

Why is this happening?

Rents in outlying suburbs are growing much faster than rents in core metropolitan areas, according to research from Apartment List.

There are a number of reasons rent trends in principal cities do not mirror those of nearby suburbs.

The pandemic’s effects on everyday life have certainly been more pronounced in cities than suburbs. Shelter-in-place requirements and business restrictions have ground to a halt many of the events and amenities that attract people to cities in the first place: live entertainment, bars and restaurants, public festivals, and the like.

Many renters today are questioning whether it still makes sense to pay a premium for city living. As a result, migration plays a big factor in the urban and suburban rent divide, according to Apartment List research.

Portland Rents Continue On Downward Track For Another Month

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Rental Property Cameras: Can I Use Them To Protect My Rental Property?

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This week the question for Ask Landlord Hank is about using rental property cameras to protect rental property. Remember Landlord Hank is not an attorney and is not giving legal advice so check your local ordinances.

Dear Landlord Hank,

I have been told that cameras are an invasion of privacy. However, I am aware that several professionally managed sites use them.

My situation involves use of cameras (NOT pointed at individual doors) placed to cut down on trash and toys that make my rentals dangerous and unattractive to tenants. Would you please clarify what the law says?

We don’t want to leave our tenants having to report their neighbors.

-Pam

Dear Landlord Pam,

You’d have to check with your state and local laws, but you should be able to place cameras viewing common areas without an issue as long as the cameras are not hidden and not IN someone’s residence,  as that could be construed as spying.

Also, cameras with audio capability are another issue you would need to check on.

I think it is a great idea but I would let current and future residents know in advance that cameras are being put in use to cover common areas around the property.

Sincerely,

Hank Rossi

Rental Property Cameras: Can I Use Them To Protect My Rental Property?
Landlord Hank says about rental property cameras that “cameras with audio capability are another issue you would need to check on.”

Ask Landlord Hank Your Question

Ask veteran landlord and property manager Hank Rossi your questions from tenant screening to leases to pets and more! He provides answers each week to landlords.
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Understanding the potential advantages of the 200% Rule in a 1031 exchange

By Dwight Kay, Founder & CEO; Betty Friant, Senior Vice President and The Kay Properties Team

 “Is that your final answer?” You may recognize the question made famous by the popular TV game show Who Wants to Be a Millionaire? Choosing the right answer in this game gives you a shot at winning big money, while the wrong answer leaves you with nothing. Investors conducting a 1031 Exchange face a similar make or break decision when it comes to identifying suitable replacement properties.

The right choices can help streamline a smooth and successful execution of a 1031 Exchange. Choosing wrong with properties that may not be viable or deals that are unable to close within the 180-day time period can derail the entire 1031 Exchange. The good news is that investors do get to identify more than one replacement property. However, just like the gameshow, once that 45-day deadline hits for identifying replacement options, those answers are final. Making the most of that short list is one reason that the 200% Rule is a popular choice for many investors. The 200% Rule allows an investor to identify the largest number of replacement options with four or more properties or Delaware Statutory Trust (DST) replacement investments.

Under Section 1031 of the Internal Revenue Code, taxpayers who are seeking to defer recognition of capital gains and related federal income tax liability from the sale of a property are required to formally identify a replacement property or properties within 45-days from the date that the original property is relinquished (the day they closed the escrow on the property they sold). The tax code gives taxpayers three different options for identifying replacement properties on that 45-Day Property Identification Form – the 200% Rule, the 3-Property Rule or the 95% Rule. So, which is the best option to use? Every situation is different. However, for those investors who want to maximize their potential options and identify four or more replacement properties, the 200% Rule is a good choice to explore.

How does the 200% Rule work?

Exchangers can identify any number of properties as long as the gross price does not exceed 200% of the fair market value of the relinquished property (twice the sale price). It is typically used when an investor wants to identify four or more properties. This is the most commonly used rule for investors considering DST investments, because of the flexibility in being able to list multiple properties to build a diversified DST portfolio. The minimum investment amount for DSTs typically starts at $100,000 whereas most commercial real estate properties are priced above $1 million. So, for an investor who has $1 million to reinvest, they could opt to put all of that $1 million into one DST (which is typically not recommended even when the DST has many properties inside of it), or they can divide that $1 million into as many as 10 completely separate DSTs.

An important mistake to avoid is to make sure the list of identified properties does not exceed the 200% limit. The IRS is a stickler for rules. If the combined price of the identified replacement properties exceeds the 200% maximum limit – even by a fraction of a percent – it won’t be accepted.

Hypothetical Example: Expanding your options

A married couple sold their manufacturing business that included the sale of the property that housed the business, giving the couple $2 million to invest in a 1031 Exchange. The couple plans to retire and both agree that they don’t want a replacement property or properties that will require hands-on management. The husband wants to buy a Triple Net Leased (NNN) fast food restaurant for $1.2 million, while the wife is in favor of a $1.5 million NNN dollar store. Both properties are listed on the 45-Day Form, bringing the total to $2.7 million. They decide to use the 200% Rule, which allows for up to $1.3 million in additional property listings.

The couple agrees to split the remaining $1.3 million across multiple DST investments, and they choose to identify:

  • $100,000 in a multifamily apartment DST property located in Denver
  • $200,000 in a multifamily apartment DST property located in Dallas
  • $250,000 in a debt free DST portfolio of NNN leased pharmacies and e-commerce distribution facilities
  • $250,000 in a NNN dialysis facility DST portfolio with locations nationwide
  • $500,000 in a DST portfolio of NNN dollar stores

Overall, the 200% Rule allows the couple to identify these seven possible options within their 45-Day period. The DSTs are all packaged and ready to go with closings that can easily close within a week. The couple uses the remaining time to conduct more research and due diligence on the NNN Dollar General and KFC. In the end, they decide to buy the KFC for $1.2 million, but they like the diversity of being about to buy a $500,000 DST interest in a portfolio of dollar stores versus a single location. The remaining $300,000 is spent in the two apartment DSTs.

In this case, the ability to leverage the 200% rule was advantageous in giving the couple more options and more time to make a final investment decision. The outcome also was successful in that their 1031 Exchange was fully executed, and their $2 million is now invested across a diversified portfolio of multiple different income-producing properties versus only one or two. However, it also is important to note that every situation is unique. Individuals should review all three 1031 identification options to choose the rule that works best for your particular situation as well as always should speak with their CPA prior to making any decisions.

About Kay Properties and www.kpi1031.com

Understanding the potential advantages of the 200% Rule in a 1031 exchange

 Kay Properties is a national Delaware Statutory Trust (DST) investment firm. The www.kpi1031.com platform provides access to the marketplace of DSTs from over 25 different sponsor companies, custom DSTs only available to Kay clients, independent advice on DST sponsor companies, full due diligence and vetting on each DST (typically 20-40 DSTs) and a DST secondary market.  Kay Properties team members collectively have over 115 years of real estate experience, are licensed in all 50 states, and have participated in over 15 Billion of DST 1031 investments.

This material does not constitute an offer to sell nor a solicitation of an offer to buy any security. Such offers can be made only by the confidential Private Placement Memorandum (the “Memorandum”). Please read the entire Memorandum paying special attention to the risk section prior investing.  IRC Section 1031, IRC Section 1033 and IRC Section 721 are complex tax codes therefore you should consult your tax or legal professional for details regarding your situation.  There are material risks associated with investing in real estate securities including illiquidity, vacancies, general market conditions and competition, lack of operating history, interest rate risks, general risks of owning/operating commercial and multifamily properties, financing risks, potential adverse tax consequences, general economic risks, development risks and long hold periods. There is a risk of loss of the entire investment principal. Past performance is not a guarantee of future results. Potential cash flow, potential returns and potential appreciation are not guaranteed. Securities offered through Growth Capital Services, member FINRASIPC, Office of Supervisory Jurisdiction located at 582 Market Street, Suite 300, San Francisco, CA 94104.

 

5 Signs An Applicant Will Be a Good Tenant For Your Rental Property

We all strive to find a good tenant, so here are five signs that an applicant will be a good tenant for your rental property from Keepe, the on-demand maintenance and repair company.

When you’re receiving lots of applications for tenant positions at your rental properties, sometimes it can be difficult and overwhelming trying to sift through everything.

After all, with so many applications in front of you, where do you begin? How do you know which applicants will make good tenants?

There are a few telling signs as to whether or not your applicants will be good tenants. You just have to know what to look for to easily identify the good from the bad and put your mind at ease.

No. 1: They Fill Out the Application Properly

 A sign of a good potential tenant is that they properly fill out the application.

That may sound overly simple, but this means that they include the appropriate documents that are asked for and fill out everything correctly.

5 Signs an Applicant Will Be a Good Tenant For Your Rental Property
A potential good tenant will be able to fill out an application completely and correctly.

Completing some simple paperwork properly is a good sign that they’re responsible and reliable, whereas if the applicant can’t even fill out the application correctly or doesn’t provide the appropriate documents, that’s a bad sign — especially in the very beginning stages of the application process.

No. 2: They Don’t Move Too Often

 Along with knowing the reason why your applicants want to move, it’s also important to know how often they’ve moved in the past.

One of the main (if not the main) qualities you should be looking for in a tenant is stability and financial responsibility.

If they haven’t moved around too much in the past, that’s a good indicator that they got along well with their previous landlords and didn’t have anything disruptive happen while they were living there.

No. 3: A Good Tenant Has Good References

References are a great way to predict how a tenant will behave. Good references show that a tenant paid rent on time, didn’t damage the property and stayed in communication with the property manager.

If a reference from a past landlord says that the tenant did thousands of dollars in damage to their last rental, well, obviously that should be an immediate red flag. Also be sure you are getting the reference from a real landlord and not someone posing as a landlord to help the tenant.

No. 4: A Clean Background Check

During the tenant screening process, of course you’ll want to conduct a background check. A good tenant will have no past discretions and a clean criminal record.

If they have a history of drug use or brush-ins with the law, chances are it will become a problem you’ll have to deal with, so it’s advised to kindly decline and move right along to the next applicant. However,  some jurisdictions have restrictions around criminal background checks, so be sure to check your local ordinances.

5 Signs an Applicant Will Be a Good Tenant For Your Rental Property

No. 5: A Good Credit Report

 Don’t skip or underestimate the credit check; It’s a good indicator of the character and payment habits of your applicant.

Neglecting the credit check is the most common mistake landlords make. Not paying their current bills? It’s likely they won’t pay the rent.

Final Thoughts

Finding a good tenant does take some patience, but it’s worth it for later peace of mind. Careful tenant screening is one of the most important tasks for a landlord or property manager, but with these specific screening tips, you’ll be on your way to a happy and easy renting experience.

About Keepe:

Keepe is an on-demand maintenance solution for property managers and independent landlords. The company makes a network of hundreds of independent contractors and handymen available for maintenance projects at rental properties. Keepe is available in the Greater Seattle area, Greater Phoenix area, San Francisco Bay area, Portland, San Diego and is coming soon to an area near you. Learn more about Keepe at https://www.keepe.com

What to Do During Plumbing Emergencies In Rental Property

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Knowing the Difference between Routine and Emergency Maintenance Requests

 

A Strange New World: How Do Oregon’s New Drug Laws Affect Landlords?

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Many landlords have questions about new drug laws that go into effect in 2021 so here are some of the issues around Oregon’s new drug laws from attorney Bradley Kraus.

By Bradley S. Kraus,
Attorney at Law, Warren Allen, LLP

If you asked 100 different people to summarize the year 2020 in one word or phrase, I would bet the answers would be as mixed as they were comical. The words “dumpster fire” come to mind for this author. For landlords specifically, the COVID-19 pandemic has required them to change how they do business, how they interact with their tenants, and—for smaller landlords especially—how they are expected to subsidize rents and pay their own mortgages, without help from the legislature.

It was also a year of strange changes in the law, as Oregon voters passed Measure 110 in November. Also known as the Drug Addiction Treatment and Recovery Act, this new law takes effect on February 1, 2021, and decriminalizes small amounts of illegal drugs for personal use. It is important to note that this new law does not legalize drugs. A person caught with a small number of drugs, including Schedule I drugs like heroin and LSD, will face “no more than a Class E violation,” subjecting them to $100 fine, which may be waived if they seek treatment.

For landlords, questions arise related to Oregon’s new drug laws. Must landlords now allow drugs to be on the rental premises? In other words, what rights do landlords have considering these new Oregon drug laws? For starters, a solid rental agreement should protect landlords from any issues.

Good rental agreements contain provisions requiring tenants to comply with all local, state, and federal laws. This last portion is critical. Setting aside the fact that possession is still technically not legalized in Oregon—only punished less—possession of these drugs is still illegal under federal drug laws and classifications. Accordingly, with a solid rental agreement, landlords still have the ability to prohibit the possession of these drugs on the premises, and take action should those provisions of the rental agreement be violated.

Most landlords will likely not know whether their tenants are possessing heavier drugs unless some other issue arises. In other words, if a tenant remains quiet, the world may never know that said tenant is sitting on several pounds of some illicit drug. However, a tenant who is raging through an all-night party with the assistance of cocaine is likely causing other issues. It is these “other issues” that landlords should also focus on.

While drugs may be punished less, these new laws do not provide a license to (a) destroy property, (b) threaten or harm others, or (c) disrupt the quiet use and peaceful enjoyment of other tenants. Each of these defaults are likely violations of the rental agreement, but also violations of the Tenants’ Duties Statute (ORS 90.325). In other words, if you confront your tenants about their conduct, and they—falsely—point to drugs being legal, you can simply point out that there have been no changes to the law regarding bad behavior. And while eviction moratoriums exist regarding non-payment of rent, no eviction moratoriums exist regarding conduct-based notices or evictions.

Landlords have faced many challenges during the COVID-19 pandemic. With the number of laws recently enacted and clearly directed at landlords, one would think landlords collectively caused this pandemic.

As troubling as this is, landlords should continue to focus on protecting good tenants from bad actors. While the people of Oregon have spoken as it relates to drug decriminalization, it is still illegal to possess these drugs. There can be no dispute, however, that the use of some drugs can cause erratic, disruptive, and sometimes violent, behavior. If landlords continue to focus on bad conduct, and continue to direct notices at the same, they will position themselves well to rid themselves of bad tenants, and to protect their many good ones.

How Do Oregon’s New Drug Laws Affect Landlords?
Bradley Kraus, Portland attorney

Brad Kraus is a partner at Warren Allen LLP. His primary practice area is landlord/tenant law, but he also assists clients with various litigation matters, probate matters, real estate disputes, and family-law matters. A native of New Ulm, Minnesota, he continues to root for Minnesota sports teams in his free time. You can reach him via email kraus@warrenallen.com or 503-255-8795.

Fair Housing Matters – Landlord Liability for Tenant-on-Tenant Discrimination

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Delinquent Landlord Payments Pose Credit Risk for Banks

Banks are worried about delinquent landlord payments from small landlords who may not be able to make payments on mortgages for rental property. Smaller landlords are getting hit harder by tenants who miss rent payments due to COVID-19, as well as rent and eviction moratoriums.

About 1.6 percent of an estimated $1.6 trillion market for mortgages on 1- to 4-unit properties were delinquent in November, according to the Mortgage Bankers Association.

And delinquencies are expected to climb.

“Small landlords are getting hit hard with no real way out of the problem until the pandemic ends,” said Chris Nichols, chief strategy officer for the nearly $19 billion-asset CenterState Bank in Winter Haven, Fla., while talking to American Banker.

“Banks have been working closely with landlords to restructure their debt and provide forbearances, but this relief will expire soon and is a concern. Defaults on rental properties are typically caused by mismanagement or economic downturns that are easier to gauge.

“Since none of us have been through a pandemic this large before, there is no playbook and few alternatives,” Nichols said.

The stimulus package enacted in December extended the Centers for Disease Control and Prevention’s moratorium on evictions through Jan. 31 and granted renters other relief. But for many landlords, their mortgage payments are still due, a reality that translates into a looming credit risk for banks, according to American Banker.

Small landlords getting hit harder

For example, Dawn Garza, a landlord and small-business owner in San Antonio, told American Banker she is hoping to get a second loan from the Paycheck Protection Program to cover her property taxes due at the end of January.

She’s short because business is down, and she gave her tenants — one a student and part-time restaurant worker, and the other an out-of-work hairdresser who is recovering from COVID-19 — a three-month break on rent this year.

“I am not going to ask for back rent because I know it’s impossible for them,” Garza told American Banker.

According to Avail, an estimated 44 percent of renters surveyed by the company in October said they did not expect to make a full rent payment that month, up from 35 percent the previous month. And about 57 percent of landlords who did not receive full rent payments reported feeling pressure to sell, according to the Avail survey.

According to a Bloomberg City Lab article, the total owed by Americans in missed rent, late fees, and unpaid utility bills by Jan. 1 was as high as $7 billion. About 11.4 million U.S. renters struggled under the financial pressures of COVID-19, resulting in each household owing an average of $6,000 in past-due rent alone.

A recent study conducted by Avail and Urban Institute confirmed that large numbers of renters are unsure of whether they can afford their rent; of 2,429 renters that responded to the question, 44 percent said they were not able to pay rent in full for October.

Do-it-yourself landlords, which make up the majority of the country’s 48 million rental units, are also struggling to make ends meet due to missed rent. In the same study, Avail and Urban Institute found that delinquent landlord payments represented 12 percent of landlords went into forbearance on at least one of their mortgages due to the pandemic. Of the 12 percent in forbearance, 20 percent are Black and 14 percent are Latino. This is compared to nine percent of white landlords facing the same issue.

Delinquent landlord payments could grow if moratoriums are extended

“I do believe that if the eviction bans are extended much longer, and continuing unemployment rates remain high, we’ll begin to see smaller investors, who are often highly leveraged, begin to default on their loans,” said Rick Sharga, executive vice president of marketing at RealtyTrac.

“Because rental properties owned by mom-and-pop landlords are generally more affordable than those owned by institutional investors, this pressure (to sell) could cause the housing market—which already had a dearth of available units before the COVID-19 pandemic — to lose even more lower-priced rental housing,” researchers at the Urban Institute said in a recent paper regarding the Avail data

Oregon Passes $150 Million Landlord Compensation Fund

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How Do I Stop Second-Hand Smoke Coming into My Apartment?

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We have been getting a lot of questions about second-hand smoke during the pandemic so if a tenant has a problem with second-hand smoke coming into their apartment, what should you do is the question for Ask Landlord Hank this week. Remember Hank is not an attorney and is not offering legal advice.

Dear Landlord Hank:

How do I get property management to do something about the second-hand smoke coming into my apartment?

-Sandra

Dear Sandra:

Exposure to second-hand smoke in multifamily buildings is a common and unhealthy issue that could lead to serious health issues, especially for children.

The smoke can come through vents, or cracks in floors, or walls.

The first place to check is your lease. Does the lease allow smoking in the units or is this supposed to be a smoke-free environment?

In most leases that prohibit smoking, this would be a serious violation and could be grounds for eviction.

You can also check to see if there are any laws in your community that address second-hand smoke in multifamily housing.

If you have a decent relationship with the offending neighbors you can talk to them NICELY about the smoking, and maybe they’d be willing to smoke outside.

You should definitely talk to your property-management company about the second-hand smoke issue in the apartment and the negative impact it is having on your family.

If there is an impact on your health, you may be able to have your doctor note that second-hand smoke is harming your health and you can show this to the property management company.

Sincerely,

Hank Rossi

Ask Landlord Hank - How Do I Stop Second-Hand Smoking Coming into My Apartment?
Landlord Hank says If you have a decent relationship with the offending neighbors second-hand smoke you can talk to them NICELY about the smoking.

Ask Landlord Hank Your Question

Ask veteran landlord and property manager Hank Rossi your questions from tenant screening to leases to pets and more! He provides answers each week to landlords.
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Reap the Benefits of Owning Your Rental Property through a Retirement Account, Tax-Free or Tax-Deferred

By Stephanie Fryar

Real estate is one of the most popular investments to leverage within a retirement account, also known as a Self-Directed IRA (SDIRA). It is a familiar asset if you own your own home or other type of property, it offers diversification from traditional investments, and the rental income and/or capital gains funnel in tax deferred or tax-free depending on the type of account. While the general concept of investing in a rental property through a SDIRA may be similar to investing outside of a qualified account, there are a handful of rules enforced by the IRS that makes the management of this investment quite a bit different. The reason being that your retirement account is meant to benefit you when you retire, not before. Below is a quick overview of the similarities and differences of owning a rental property in a Self-Directed IRA.

What makes it similar?

A SDIRA gives you the opportunity to make investment decisions in areas based on your knowledge and expertise. In other words, you are not limited to residential real estate. Your IRA can hold various investment property types, including commercial buildings, retail properties, raw land, and acreage (improved or unimproved), single family or multi-unit homes, condos or townhomes, mobile homes, apartment buildings and much more. Your IRA may also purchase foreclosure property as long as the property has already been foreclosed upon.

Reap the Benefits of Owning Your Rental Property through a Retirement Account, Tax-Free or Tax-Deferred

What is the difference?

One of the main differences is that all transactions are processed through your SDIRA, from the purchase of the property, to rent collection, expense payments, proceeds from the sale, etc.

Other disparities are driven by IRS regulations, including the prohibition of using of your SDIRA assets in what the IRS considers “self-dealing” transactions. This means that you must utilize 3rd party services for everything from realtor services, to property management, cleaning/landscaping/pool cleaning services, repairs, home improvements, etc. You also cannot use the property for personal use nor rent the property to disqualified persons, which includes family members of “lineal” relation to you such as your parents or your children.

As a custodian, Preferred Trust Company cannot give advice about specific investments or strategies, but we can provide educational resources and point out the legal issues to consider for your real estate transaction(s). Knowing the rules associated with owning real estate in an IRA is essential and conferring with a legal and tax advisor is recommended.

About Preferred Trust Company

Preferred Trust has 10 years of experience specializing in Self-Directed IRAs that hold alternative assets. In the industry, they set the standard for quick processing times, fewer transaction fees, personalized customer service, and the highest standard of compliance. Preferred Trust is currently waiving the establishment fee and first year administration fee for all new Self-Directed IRA accounts through December 31st, 2021. Learn more about this offer by clicking here or calling 888.990.7892 today!

About the author:

Stephanie Fryar is the Content Creator for Preferred Trust Company. All content she produces is to help educate savvy investors and current clients about Self-Directed IRAs. Stephanie specializes in original content and market research related to alternative investments, but more specifically, real estate investments.

Multifamily Transactions Down In 2020, But Set To Rebound

The Benefits of Being Pet-Friendly For Rental Property Owners

Rental property owners are now integrating pet-friendly amenities in their apartments to allow renters to keep their favorite animal companions.

By Justin Becker

The dog is humankind’s best friend, and this explains why it is the most domesticated pet. According to statistics in the United States, 63.4 million households own a dog, followed by 43 million households that own a cat. Today, pets are an integral part of most families. Even rental property owners are now integrating pet-friendly amenities in their apartments to allow renters to keep their favorite animal companions.

So, what’s the benefit of your apartments being pet-friendly?

Being Pet-Friendly Means Higher Rent

Just as in the law of demand, fewer housing facilities means higher rent for the few available. Of course, it will cost you more to set up the necessary facilities to make your apartment pet-friendly, but you can compensate for this with a slightly higher rent.

Rental property owners can also set non-refundable pet fees, and because renters want to keep their family together, they will willingly pay the amount. They can again ask for a damage deposit to ensure the property is covered in case of damages, or demand compensation for pet damages.

Besides, you don’t have to worry much about your property. People committed to keeping their pets tend to be careful with their animal companions and ensure they do not become a threat.

Pet-Friendly Apartments Mean Trust

The Benefits of Being Pet-Friendly For Rental Property Owners
Allowing pets indicates that you trust the tenants and believe they can take good care of their pets.

In the traditional tenancy agreements or where pets are not allowed, the relationships between renters and landlords tend to feel tense. A total ban on pets creates the feeling that the landlord mistrusts tenants or believes they will leave the property in bad shape.

On the other hand, allowing pets indicates that you trust the tenants and believe they can take good care of their pets. Renters will obviously feel happy about a landlord who accommodates their lifestyles rather than limiting them.

Prolonged Tenancy

It is challenging to find pet-friendly apartments, making pet owners want to stay longer in your rental property if it is pet-friendly. While they may only be there for lack of other housing options, you still earn your income at the end of the month.

Further, some pets, such as dogs, get fond of the surroundings and will recognize the apartment as home. As such, even the owners will be unwilling to shift to a new residence.

Strained landlord-tenant relationships are also a common cause of residence shifts by renters. Since marking your rental property pet-friendly means trusting your tenants’ level of responsibility, you may have more healthy relationships, so they are less likely to want to shift.

Happier and Healthier Tenants

Pets help keep tenants happy
Pets help keep tenants relaxed so your apartment feels like home for the renters and they will want to stay.

Pets have many health and non-health-related benefits. They provide protection, help ease stress, and provide company, among other advantages. These benefits help landlords to have healthy and happy tenants, thus reducing the chances of strained relationships. The pets keep them relaxed, and your apartment feels like home for the renters.

Also, a pet-friendly apartment means there are no chances of tenants trying to sneak in their pets. The policy may not allow all kinds of animals, but it probably covers the most obvious pets. Attempting to sneak in unauthorized animal companions is among the issues that could strain tenant-landlord relationships.

In addition, pet owners, and especially dog owners, know the importance of exercise. The animals can play around with toys, but a morning run or walk goes a long way. Most owners prefer to take them out for these walks and runs so they benefit from the exercise.

Happy and healthy tenants will feel free to communicate. They can speak out their grievances and allow you to take action rather than opting to find other low-income apartments.

Allowing Pets Gives You an Upper Hand

The Benefits of Being Pet-Friendly For Rental Property Owners
Given that over 70% of renters own pets, making your apartments pet-friendly opens them up to more tenants.

It’s easy for tenants to try to get their pets into an apartment under the radar with the hope of not getting caught if your policy restricts them. Of course, this creates a tense mood, even if you are yet to find out.

However, allowing pets and setting out a clear policy will enable you to be notified of the pets coming in and have a chance to screen them. You can take note of aggressive animals that could be a threat and decide whether to allow them or which safety measures to take.

You can inspect the health of the animals and ascertain that they have the necessary vaccinations. Also, you could take the initiative and provide some services, such as spraying before entry.

You Will Have More Tenants

Given that over 70% of renters own pets, making your apartments pet-friendly opens them up to more tenants. Further, it means there will be fewer vacancy times since tenants will be unwilling to relocate, and so you can earn a steady rental income year-round.

Your Property will Attract Millennials

Millennials are a key demographic.
Millennials are favoring pets to children. This demographic is a significant proportion of the current consumers, and most property owners want them as part of their tenants.

It’s already a fact that millennials are favoring pets to children. This demographic is a significant proportion of the current consumers, and most property owners want them as part of their tenants.

Besides, companies are also applying this trick, and you are likely to find more pet-friendly offices in the corporate world than ever.

The Business Insider released a report in February 2020, claiming that millennials want financial freedom or homeownership. Homeownership comes with the freedom to do what they want, so a restriction on pet ownership would probably not trend well with them.

It Could Mean More Safety

One of the reasons dogs are our best friends is their ability to provide the owner with protection. Trained dogs can detect strangers with ill motives or trespassers, especially at night, and react quickly. They are intelligent animals that can quickly learn and interpret voices and body language.

The skill can help them interpret a situation and know when the owners are in danger or when something is not right. As such, allowing tenants to keep pets will provide safety not just to them, but to your property as well.

Having dogs and other pets around can also help you drive away dangerous animals that find their way into the compound. For instance, cats will keep destructive rodents out of your complex.

Wrapping Up Pet-Friendly Benefits

Although making your rental property pet-friendly might need additional resources that can be a bit costly, it will pay off at the end. Most renters will prefer renting where they feel the landlord understands their needs and gives them the freedom they deserve. Moreover, property owners who make their rentals pet-friendly are likely to increase the rent without experiencing a protest from the tenants.

Given the many benefits associated with making rental properties pet-friendly, owners should  include the resources. That way you can be guaranteed of all your rentals being full throughout the year.

About the author:

Justin Becker is a property owner in the state of Michigan and has a passion for managing communities. He owns apartment complexes and mobile home communities, and has been writing his own blogs for his properties for several years.

 

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